UK: Taxpayer funded aid for poverty consultants

An investigation by the Sunday Telegraph reveals how taxpayers' money devoted to foreign aid actually ends up in the pockets of very wealthy people.

The Telegraph's investigation has discovered that the British government last year paid "aid consultants" half a billion pounds.

Adam Smith International, an off-shoot of the Adam Smith Institute, received £37 million for its advice on promoting the free market in the developing world. The work of the charity includes tax reform in Afghanistan and school capacity building in Pakistan.

Peter Young, a director of Adam Smith International (ASI) and Amphion, a holding company for the directors of ASI, justified the payments, claiming:

We have got tax revenues in Afghanistan up from next to nothing to £2billion. If you want to get a good job done, you have to get people who know what they’re doing. Our profit margins are on the low side for consultancies.

Mr Young added that most of ASI staff earn between £300 and £850 a day, which he compared to the cost of a plumber:

If you hire a plumber in London, you’re going to be paying £1,000 a day, if not more.

Whilst the fact that plumbers in London are earning a quarter of a million pounds a year will doubtless come as news to some people, it is clear that Mr Young and his fellow directors at ASI are paying themselves over a million pounds a year in salary and dividends.

Maxwell Stamp, another consultancy was paid £16.4million by Department for International Development (DFID) last year for projects including community legal services in Bangladesh and opposing child marriage in Ethiopia. Its highest-paid director earned at least £326,000.

As the Express points out, PricewaterhouseCoopers was paid £25.5million, advising countries such as Congo, where it has interests connected to mineral reserves.

The Telegraph notes that several of the highest paid consultants are former DFID officials.

The International Development parliamentary select committee questioned the payment of large fees to consultants earlier this year. Indeed, Jo Johnson, a Conservative MP on the Public Accounts committee, asserted that the DFID was "shovelling money" at consultancies in order to meet spending targets, which have substantially increased, whilst domestic public spending has been subject to significant austerity cuts.

Matthew Sinclair, chief executive of the TaxPayers’ Alliance, said:

This is further evidence that the department is failing to ensure that taxpayers’ cash is being spent wisely. Ministers have insisted that they need more money to help the world’s poorest, but taxpayers will be appalled that hundreds of millions of pounds is being channelled to pricey consultancy firms.

A spokesperson for the government defended the fees, as value for money, saying:

Those organisations have won contracts to work for DFID through a best value, competitive bid process.

As the Guardian reported, Justine Greening, the new Secretary of State for International Development, announced on Tuesday that the government remains committed to its target of spending 0.7 percent of gross domestic product (GDP) on foreign aid. She asserted:

I will critically assess our budget on behalf of the British taxpayer to make sure that, pound for pound, it goes exactly where it's intended and where it can make the biggest difference.